May 5, 2010


Chile's fishing industry upset with policy change


Large fishing companies in Chile are upset with the demand for change in the quota system made by the Norwegian company, Lota Protein.


The 10-year policy called the Law of Ship-owner Maximum Capture Quotas (LCMA) will expire in 2012. Currently, every fishing company has a maximum quantity of fish that they can take out of the water.


Lota Protein has a low allotment and contends that the quota system provides a barrier to entry for free competition. Riola Solano, the group's lawyer, has requested that Article 27 of the Fishing Law (Ley de Pesca) be applied, which would allow anywhere from 5%-50% of the quota to be auctioned. 


Rodrigo Sarquis, president of the fishing company Pesquera Itata in Chile, points out that "the company that owns Lota Protein is the second largest producer of fishmeal and fish oil in their country (Norway's Koppernes) and the destruction of the Chilean industry would bring them large benefits." 


"Auctions to bid out quotas have brought some fishing industries to collapse," he said, because they induce the bidders to push for a higher overall cap on fishing due to the additional money invested. Chile's experience has shown that auctions for species such as orange rough and deep-sea cod have not opened the market and, indeed, permitted the industries to become more concentrated.  


Other companies reject the proposal because the current quota system assures them a sufficient yearly catch to sustain their fish processing plants. They say any potential change in quotas could discourage reconstruction investment at a critical time. Some US$4 billion are invested in Chile's fishing industry.